The major averages are sinking along with a trio of tech giants that are sliding following their earnings reports last night. Apple (AAPL), the biggest of the bunch, is leading the way lower and dragging the market down with it, but Amazon (AMZN) and Facebook (FB) are not helping matters. Alphabet (GOOGL) is the exception on the upside, as the search company is the only member of the quartet to be moving higher following its blow-out results.
ECONOMIC EVENTS: In the U.S., personal income rose 0.9% in September, with spending up 1.4%, which both beat expectations. The Chicago PMI manufacturing index slipped -1.3 points to 61.1, which was a smaller decline than expected. The University of Michigan consumer sentiment survey inched up to 81.8 in the final October print from 81.2 in the preliminary reading.
The Federal Reserve Board announced that it has adjusted the terms of the Main Street Lending Program in "two important ways" to better target support to smaller businesses that are facing continued revenue shortfalls due to the pandemic. In particular, the minimum loan size for three Main Street facilities available to for-profit and non-profit borrowers has been reduced from $250,000 to $100,000 and the fees have been adjusted to encourage the provision of these smaller loans.
Data from the Johns Hopkins Whiting School of Engineering shows there are now 45.2M confirmed cases of COVID-19 worldwide, including about 9M in the U.S., and 1.18M deaths due to the disease, including about 229,000 in the U.S.
TOP NEWS: Shares of Apple are 5% lower near noon despite the company's report last night of better than expected sales and earnings and CEO Tim Cook's assertion that "the early response to all our new products, led by our first 5G-enabled iPhone lineup, has been tremendously positive." Five "difficult questions" emerged from the results and conference call, according to Citi analyst Jim Suva, which include no guidance for the third quarter in a row, a 29% decline in sales in China, commentary on the outlook despite no guidance, the question of why product gross margins were lower, and the potential for regulatory oversight.
Shares of Amazon are nearly 5% lower following the company's Q3 results despite JPMorgan analyst Doug Anmuth, and several of his peers, raising their price targets on the shares. Anmuth believes Amazon exceeded high expectations on the top-line and said that while the cost is high, the company is making significant investments to keep up with elevated demand and deliver for customers in a way that few, if any, others can through this time period.
Shares of Facebook are 6% lower as well despite its report prompting a number of price target hikes around the Street. Among those getting more bullish, RBC Capital analyst Mark Mahaney raised the firm's price target on Facebook to $350 from $320 as he contends that the company's Q4 guidance suggests revenue growth acceleration and reflects a "full V-shaped recovery." Mahaney added that Facebook's implied 31%-44% capital expenditure growth view suggests that the company is "investing aggressively in innovation from a position of strength."
Alphabet is the outlier this morning as class A shares are up 4% after the parent of Google reported revenue and profit that beat analysts' consensus forecasts by a wide margin. Deutsche Bank analyst Lloyd Walmsley raised the firm's price target on Alphabet to $2,250 from $2,020, telling investors that he thinks Alphabet's plan to break out segment operating income for Google Cloud can help further demonstrate "healthy" margin trends in the core ad business.
Outside of tech earnings, shares of Chevron (CVX) are up 2% and those of Exxon Mobil (XOM) are down 1% following their respective quarterly reports. Both had mixed reports, but mixed in different directions, as Chevron reported an adjusted profit when a loss was expected while posting lower than expected revenue. Meanwhile, Exxon saw a quarterly loss, even after adjustments, but topped revenue forecasts. Exxon, whose losses were not as bad as forecast when excluding some items, also confirmed plans to cut the size of its workforce and said it may divest more assets than previously communicated.
MAJOR MOVERS: Among the noteworthy gainers was Equillium (EQ), which rose 10% after receiving FDA clearance to begin a Phase 3 clinical trial evaluating itolizumab in hospitalized COVID-19 patients suffering from acute respiratory distress syndrome. Also higher were MoneyGram (MGI), Plantronics (PLT), and Under Armour (UA), which gained after reporting quarterly results.
Among the notable losers was FirstEnergy (FE), which declined 3% after announcing the termination of CEO Charles Jones after the board determined that Jones, as well as two other executives, violated certain company policies and its code of conduct. Also lower were Twitter (TWTR), Opko Health (OPK), and Atlassian (TEAM), which fell 20%, 18%, and 8%, respectively, after reporting quarterly results.
INDEXES: Near midday, the Dow was down 276.82, or 1.04%, to 26,382.29, the Nasdaq was down 274.16, or 2.45%, to 10,911.43, and the S&P 500 was down 46.92, or 1.42%, to 3,263.19.
Apple
-5.79 (-5.03%)
Alphabet
+65.81 (+4.23%)
Amazon.com
-149.68 (-4.65%)
Ticker changed to META
-15.87 (-5.66%)
Exxon Mobil
-0.5 (-1.52%)
Chevron
+0.84 (+1.22%)
Equillium
+0.45 (+7.51%)
Symbol changed to POLY
+1.87 (+9.85%)
MoneyGram
+0.79 (+17.63%)
Under Armour
+0.005 (+0.04%)
Under Armour
-0.12 (-0.87%)
FirstEnergy
-0.98 (-3.08%)
-10.43 (-19.89%)
Opko Health
-0.76 (-18.12%)
Atlassian
-17.6 (-8.34%)
Alphabet
+62.6 (+4.00%)